US Treasury Yields 1998-Present
The above chart suggests it is far too premature to believe that long-term yields have bottomed.
US Treasury Yields 5-year Duration and Under 1998-Present
Other than zero-bound 3-month treasuries, it is difficult to present a clear technical case that even short-term rates have bottomed.
And given that a huge percentage of the world’s bonds trade at negative interest rates, one cannot make a legitimate case that any bond yields have bottomed.
Mike “Mish” Shedlock
3) the bottom line of the 5Y channel is much more interesting than the resistance line. It ‘s immerse with all other short duration rates. The 3M have the same resistance (top) line, but the distance from the support line is wider.The lows, are higher lows and the whole period of hugging the zero line since 2008 to 2015, the 3M, relative to the channel support line, was rising with zero volatility , and lately spiking up, approaching the resistance line. The channel don’t care about the zero line. We do. if the 3M will be above the 5Y it will hit the resistance line, it will probably be a spike. After spiking up, 3M might go in direction of the to the support line, or even spike down below the zero line.
2) $UST5Y resistance line should be the tops of 1989, 2000 & 2007.
1) The SPX possibly had a buying climax on 11/30 on high vol. and the fast response the next day.
Mish is close to being the last Deflationist. We’ve got an inflationary Fed, ALWAYS an inflationary fiscal policy & inflationary tax reform looming. I don’t see how interest rates go lower without a recession & major market correction.
The Fed asserts that it controls interest rates. If it does, it is hard to imagine it allowing much increase, as for every 1% rise in the discount rate, at some point Treasury debt service costs rise $200 Billion.
Its pretty hard to consider any market in isolation. Euro junk is yielding less than UST?
Yields will have bottomed, when enough Americans have grown up sufficiently, to make default an option even Kramer and the rest of the investor drones can’t manage to miss. Then Big Foreign bond holders will scream bloody murder, and “remind” Americans of all the scary imaginary hobgoblins that lie in wait for those who don’t embrace their slave status with sufficient enthusiasm. To which the Trump voters will respond with: It’s Us vs The Foreigners! They took our jobs! We’re not paying them a dime! And then yields will rise. Unfortunately, it looks like we’ll be, if possible, even more like Venezuela than we already are, before growing up is in the cards.
It’s a race to a BOTTOMLESS pit as the negative interest “can of worms” has already been opened.